'High' volatility is just a return to normal

The volatility seen late last year was a return to normal levels, according to the manager of HSBC's Global Emerging Markets Volatility Focused fund.

During 2018 the Vix volatility index reached its highest level for more than three years and the MSCI All Country World index – which measures the performance of more than 2,700 companies in 23 developed markets and 24 emerging markets – was down 0.46 per cent in the year to the end of November, on a gross, total return basis.

But speaking to FTAdviser, Edward Conroy said: "Volatility is very hard to predict. But what I will say is volatility came down to historic low levels in 2017 and since then has returned to what I consider to be historical long run average levels.

"So it feels that volatility is at a really elevated level but in fact I would say that it isn't.

"You can never predict when volatility is going to arise. It can be because of any number of things. It could be political developments or economic and I think it is something where the most important thing is to get straight in your mind the amount of volatility your clients are prepared to take and find them suitable investments that behave in a way they are expecting when volatility does pick up."

Mr Conroy added that it was important to consider other alternative asset classes beyond equities and bonds because of the increasing correlation between the two.